How the mighty have fallen
07/01/08 03:00 PM Filed in: Branding
There was a time when it was really cool to walk around with a Starbucks cup; that was then this is now. A coffee chain with brand equity that most marketers would have killed for has taken a turn for the worse and there are some lessons to be learned here.
Lesson 1: Coolness has a price point
Yes it was cool to walk around with a cup of Starbucks coffee but in a down economy people start asking themselves “do I really need to spend $4.00 for a cup of coffee”? Well with gas coming close to $5.00 the answer to that is NO. New products were slow coming and not promoted well and essentially Starbucks lost that part of their brand equity that made them cool.
Lesson 2: Competition is always waiting to pounce
McDonalds and Dunkin Donuts launched major counter offensives against Starbucks with beverages that not only tasted better but were a hell of a lot cheaper. Together they took share away from Starbucks and started the downturn of the brand.
Lesson 3: Too many stores & loss in quality control
“The Starbucks experience” was much like the coffee house on the TV show Friends. You could go relax with friends, read the paper, check your eMail or just hang while enjoying your brew. The problem is that as the brand started to grow and open more stores they became almost anemic looking with no personality. Then came bad quality control..no longer could you get a Latte at one store and have it taste the same as other Lattes that were purchased from other stores. Espressos and Cappuccinos lost their appeal to many who above all wanted consistency.
Lesson 4: Burnt Coffee
Starbucks traditional coffees were replaced by dark roast flavors that often tasted like “burnt coffee”. Starbucks tried to change this with the reintroduction of Pikes Place Roast but alas it was too late. Now the Chairman of Starbucks wants to install $20,000 espresso machines in each store, like that is going to make a difference.
So what is the lesson to be learned here? Brand equity has a lot of elements but the intangible elements are often the ones that can easily get damaged when you lose sight of what made you great. Apple is enjoying the brand equity of “being cool” but if Apple ever stopped innovating they would also lose their platinum brand equity.
Will Starbucks ever make a comeback? That’s hard to say, for when you lose customers it costs 5 times as much to win them back and I am not sure that Starbucks has the marketing smarts to do that anymore.